Liontown unveils Sumitomo support for lithium project

The funding would address the supply gap identified in January, when Liontown revealed a 64% cost blowout from an estimated $545 million to $895 million for Kathleen Valley, due to inflationary pressures and scope changes including a plant expansion to 3Mtpa.The project was originally fully funded by equity and deals with tier one partners Tesla, LG Energy Solution and Ford, which has provided a $300 million debt facility.Liontown is also targeting early cash flow from Kathleen Valley, 60km north of Leinster, with the board last week agreeing to sell up to 300,000 tonnes of direct shipping ore ahead of first spodumene concentrate production slated for mid-2024.Liontown said today it had received a joint Letter of Support from the international Export Credit Agencies of Australia, South Korea and the US, indicating conditional finance interest for up to $300 million to support delivery of Kathleen Valley."I look forward to this indicated support progressing towards committed funding, and driving all our financing options to completion well ahead of the requirement for additional funds," managing director and CEO Tony Ottaviano said ahead of his presentation to Diggers & Dealers mining forum in Kalgoorlie.Liontown had $305.4 million cash at June 30, with $118.8 million drawn down from $300 million Ford finance facility in the quarter.Mining and construction was progressing to schedule and "materially in line with the capital expenditure estimate", Liontown said.Figures would be finalised once the underground mining contract was awarded this quarter, which would enable Liontown to finalise its operating cost review.Ottaviano told MiningNews.net he was confident underground mining would begin in December.Bill Beament's Develop withdrew from the tendering process last month. Sumitomo dealThe agreement with Sumitomo would support a jointly-funded, two-year study to explore using Liontown's spodumene, or a future lithium sulphate product produced in a Western Australia-based plant, to produce lithium hydroxide in Japan."We are putting our downstream strategy into action by partnering with Sumitomo Corporation to explore the feasibility of developing downstream lithium products between Australia and Japan - two longstanding and successful partner nations in natural resources," Ottaviano said.Watch and learnLiontown was benefitting from seeing what worked at other hard rock lithium operations in Western Australia, Ottaviano said during the site visit."It's invaluable to learn from others," he said.Liontown was also doing some things differently, including installing sloped floors in the processing plant to aid recovery and putting two ore sorters in the DSO circuit to improve the grade.The company was also installing an on-stream analyser - "the first in the world, that'll provide assays in six minutes," Ottaviano said.Another standout are the "magic mushrooms" or Millennium Falcons - as they've been dubbed on site - the columns which will support the float cells.It took a lot of engineering to create the column-based approach but would keep the area underneath accessible for machinery to access and feed any overflow back into the system, visitors were told. Columns to support the float cells at Kathleen Valley LogisticsLiontown said it was "on track" to have 60% renewable energy at Kathleen Valley from day one, by building one of Australia's largest off-grid hybrid renewable power stations.Installing the wind turbines for the wind farm will need a giant crane requiring 58 semis to get it to site then 42 days to put it together.The minimised footprint of the wind farm was also testament to the company's strong relationship with the Tjiwarl, the traditional owners, Liontown said.The area cleared for the turbines was "just what they needed" rather than being unnecessarily wide, Tjiwarl chairman Brett Lewis told the visitors.Ottaviano said he was proud of the "tremendous achievement" that had occurred on site in the past 12 months.The run of mine (ROM) pad has 21,000t of DSO material grading 1.38% awaiting shipping, the processing plant is under construction, as is the renewable energy project."Liontown really is powering ahead on all fronts, and our flagship Kathleen Valley project is now less than 12 months from first production," he said.Shareholder supportHaving rejected an offer from US lithium major Albemarle in March, Ottaviano said Liontown was "very focused on building Kathleen Valley"."But there's more work to be done," he said, referring to cash generation and delivering dividends to shareholders, including a very dedicated investor who was also a surprise visitor.The man had invested at 11c and drove across the Nullarbor on his motorbike to see Kathleen Valley before he went to Diggers and Dealers, Ottaviano said during the site visit."He was ready to drive up to the ROM pad but a team member stopped him," he said."That's commitment."Liontown shares have virtually doubled year-to-date.They were up about 1.3% in morning trade to $2.78, capitalising the company about $6.1 billion.

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